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Originally published Tuesday, April 10, 2012 at 3:27 PM

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The red envelope: capitalistic health care in Red China

Editorial columnist Bruce Ramsey examines corruption in Chinese hospitals and that country's choice of whether to have an American-style or British-style medical system.

Seattle Times editorial columnist

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I recently had dinner with an orthopedic surgeon who had practiced as a guest in Beijing. The care in the government hospital was world-class, he said, though a few things seemed odd. The surgeons had a smoking room. Almost all the doctors were men and all the nurses were women. And on the walls were signs forbidding the passing of red envelopes.

Chinese use red envelopes to make gifts of cash — at weddings, Lunar New Year and, in China, in hospitals.

"In China, if you have money, you can have the best," the surgeon said. "Under the table, it is a capitalist system."

Officially, the cost of a stay is minimal, but at a Beijing hospital, to be operated on by a senior surgeon required an envelope with about $800. A surgery on a fractured femur cost about $8,000; on a tibia and femur it was about $20,000. At provincial hospitals the costs are lower. So is the quality.

China's standard of living is one-fifth that of the United States, and few Chinese have health insurance. Patients who cannot afford the surgery are discharged, sometimes with their damaged joints allowed to fuse.

"It is the first time I have seen this," the surgeon said.

To his surprise, many people, even farmers, did have the cash. Many Chinese save half their pay. They borrow from family members, are supported by their work unit or are paid by the person who injured them.

"They can pay, but only once," the surgeon said. "They cannot afford complications." Patients take antibiotics to prevent postoperative infections, and leave the hospital as soon as they can.

Hospitals have an even bigger source of revenue, the surgeon said: rebates from pharmaceutical companies.

You don't hear much about the medical system in China. When it was genuinely communist, I did hear about it; My lefty friends, who knew only that medicine there was egalitarian, told me how good it was. And it wasn't.

"The big picture is one of enormous health improvements over the past 30 or 40 years," says Dean Jamison, professor at the University of Washington's Department of Global Health. Still, he says, the system provides unnecessary pills, X-rays and surgeries because hospitals are allowed to charge for them. Making patients pay, he says, results in "the impoverishment of people who have to sell assets or borrow money or have to take a daughter out of school."

Jamison says an unusual debate is under way in China about its medical system. One side argues that China be openly market-driven and introduce American-style health insurance. The other side, which has had the upper hand lately, argues that the state spend more on health care directly.

Jamison favors the latter. The market system is too uneven, he says.

On a recent trip to China, I talked to an academic in the other camp: Wen Hai, dean of the HSBC Business School at Peking University. Wen said China's choice is between subsidizing supply or demand — that is, a British-style system or an American-style system.

"Now we are working on the British model," he said — an underfed British model kept alive through corruption. Wen would post the charges officially and increase people's ability to pay by subsidizing insurance.

"I think the American model is better," he says.

In Beijing, Shanghai and Guangzhou are private hospitals owned by U.S. corporations that follow the American way of openly charging for service. My surgeon says the physicians he knew in Beijing preferred the government hospital, where they could make more money from drug-company rebates and the patients' red envelopes.

Bruce Ramsey's column appears regularly on editorial pages of The Times. His email address is bramsey@seattletimes.com

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